Creative Financing Explained: Seller Finance, Subto, and Hybrid Deals

Did you know you can buy real estate without using a traditional bank loan?

Yep, it’s true! Creative financing is one of my favorite ways to invest in real estate. These strategies helped me grow my business fast—even when I didn’t have a ton of cash or perfect credit.

In this blog post, I’m going to explain three powerful creative financing methods: seller financing, subject to (Subto), and hybrid deals. Whether you’re just starting out or already have a few deals under your belt, these tools can help you close more deals and build wealth faster.

1. What is Seller Financing?

Seller financing is when the seller acts like the bank.

Instead of you going to a lender to borrow money, the seller agrees to accept monthly payments over time. You and the seller agree on the price, the down payment (if any), the interest rate, and how long the payments will last.

Why is this awesome?

• You don’t need a bank loan or approval

• Terms can be super flexible

• It helps sellers who want steady monthly income or who own their home free and clear

Let’s say the seller wants $200,000 for their house. Instead of you paying that all at once, you might give them $10,000 down and pay the rest over 10 years.

2. What is Subject To (Subto)?

“Subject to” means you buy the house subject to the existing mortgage staying in place.

So the seller already has a mortgage, but instead of paying it off when they sell, you take over the payments. The mortgage stays in their name, but you become the new owner.

Why would a seller do that?

• They may be behind on payments or just want out of the house quickly

• You’re solving a problem for them by taking over the mortgage

• It avoids foreclosure and helps protect their credit

This is great if you don’t want to—or can’t—get a new loan. You just step into the seller’s shoes and start paying the mortgage they already had.

3. What is a Hybrid Deal?

A hybrid deal is the best of both worlds.

It’s a mix of seller financing and subject to. You take over the seller’s mortgage (Subto), and if they still have equity in the property, you pay them the rest through seller financing.

Here’s a quick example:

• The house is worth $250,000

• The seller owes $180,000 on their mortgage

• You take over the $180,000 loan

• Then you agree to pay the seller $70,000 over time as seller financing

This gives you flexibility and allows you to make deals work—even when the numbers are tricky.

Why Creative Financing Matters

These strategies have changed the game for me.

✅ I’ve been able to buy more houses
✅ I’ve helped sellers who felt stuck
✅ I’ve built my portfolio without relying on banks

Creative financing is all about finding a win-win. It’s about solving problems and thinking outside the box.

Even if you’re low on cash or your credit isn’t perfect, these tools can help you become a confident, successful real estate investor.

Final Tips for Creative Financing Success

• Always be honest and clear with the seller

• Get everything in writing

• Work with an investor-friendly title company or attorney

• Don’t be afraid to ask questions—it’s how we learn!

Creative financing opens up so many opportunities. If you’re ready to stop waiting on banks and start closing deals, this is the way to go!